Fitness First said it had Picture: Christian GillesSource:News Corp Australia

FITNESS First has been fined $12,600 for stinging customers with excessive 50-cent surcharges on their membership fees.

The gym chain, which operates 61 locations around the country, was issued an infringement notice by the Australian Competition and Consumer Commission for alleged breaches of the excessive payment surcharge provisions of the Competition and Consumer Act.

The notice related to the flat fee charged on members who paid by direct debit from credit, debit and EFTPOS cards between December 2017 and April 2018. The ACCC alleged that in some cases, the 50-cent fee exceeded the cost of processing the payments.

On the $46-a-fortnight “Passport” membership rate, the 50-cent flat fee equated to about 1.09 per cent, higher than Fitness First’s costs of processing the MasterCard debit payment of 0.81 per cent.

“While there is nothing to prevent businesses from imposing flat fee surcharges if they wish, they must ensure the surcharge amount does not exceed their cost of acceptance for any given transaction,” ACCC deputy chair Mick Keogh said in a statement.

“Where a transaction is processed for a smaller amount, a flat-fee surcharge can often become an excessive surcharge. This highlights the issues faced by businesses if they decide to impose a flat fee surcharge.”

“The onus is on businesses that choose to impose surcharges to get it right,” he said.

The ACCC said the chain co-operated with the investigation and has amended its surcharging practices. Payment of the penalty is not an admission of a contravention of the Act.

In a statement, a Fitness First spokeswoman said the company had credited all members who were impacted by incorrect surcharges.

“The incorrect charges were discovered following the introduction of a new billing system [to meet new payment surcharge legislation],” she said.

“The fixed ‘per transaction’ fee previously utilised by Fitness First for processing card payments had resulted in some members being undercharged and some members being overcharged.

“Fitness First did not profit in aggregate from the historic procedure and has now implemented a new system of dynamic billing to ensure accurate cost recovery for specific card types. No action will be taken in relation to members undercharged.”

The watchdog has previously issued infringement notices against RedBalloon and Cruisin Motorhomes for excessive surcharging and commenced civil action against Europcar.